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Judgment
H.C. Goel, J.
(1) This is a petition filed by the petitioner u/s 20 of the Arbitration Act, (for short the Act), praying that the matters in dispute as stated in the petition be referred to the arbitration of the sole arbitrator to be appointed in accordance with the arbitration agreement dated August 30, 1978 as entered into between the parties. The petition has been contested by the respondent. The following issues were framed :
Whether there is a subsisting arbitration agreement between the parties as alleged by the plaintiff?
2.Whether this Court has no territorial jurisdiction to try the application ?
3.Whether the plaintiff is estopped from seeking the relief under the agreement dated August 30, 1978 as alleged in para 3 of preliminary objections ?
4.Whether the application is premature ? (Onus on parties).
Findings : Issue No. 1
(2) A copy of the agreement dated August 29. 1978 (Ex. P 1) has been duly admitted by Mr Amarjit Singh, counsel for the respondent. A perusal of this document shows that the agreement in question including the arbitration clause was duly entered into between the parties. The issue is accordingly decided in favor of the petitioner. Is we No 2
(3) A perusal of the agreement copy of which is Ex. P 1 shows that the work in question was to be executed by the petitioner at Delhi. The payment for the execution of the work was also to be made by the respondent to the petitioner at Delhi. Thus this Court has got the jurisdiction to entertain and decide tins petition. The issue is accordingly held in favor of the petitioner. Issue No. 3
(4) This issue was not pressed by the learned counsel for the respondent at the hearing of the petition. The issue is accordingly held in the negative. Issue No. 4
(5) The objection of the respondent is that the petitioner ought to have sought reference through arbitration by the persona designata namely, the Managing Director of the respondent Corporation out of Court i.e. that it was the duty of the petitioner to have approached the Managing Director of the respondent to appoint an arbitrator and in the event of his refusal or neglect to appoint an arbitrator alone the petitioner could approach the Court u/s 20 of the Act for appointment of an arbitrator by it and that the petitioner not having approached the Managing Director of the respondent out of Court, the petition is not maintainable. I do not think there is any merit in this contention. In this petition the petitioner has not prayed for the appointment of an arbitrator by the Court itself. All that the petitioner has asked for is that an arbitrator may be appointed so that the matters in dispute can be referred to arbitration of the arbitrator to be appointed in accordance with the arbitration agreement as entered into between the parties. Mr. Pradeep Aggarwal, learned counsel turn the petitioner, submitted that as in accordance with the arbitration agreement, Ex. P1, an arbitrator has to be appointed by the Managing Director of the respondent Corporation, all that the petitioner wants is that the Managing Director of the respondent Corporation may be directed to appoint an arbitrator and to refer the disputes that have arisen between the parties to the arbitrator to be so appointed by him and that the contingency for the appointment of an arbitrator by the Court itself has not as yet arisen. It may arise only in case of refusal cr neglect to appoint an arbitrator by the Managing Director of the respondent Corporation. It is submitted that fur the appointment of an arbitrator by the Managing Director of the respondent Corporation two courses were available to the petitioner namely (1) seeking appointment of an arbitrator by him out of Court and (2) seeking appointment of an arbitrator by him through the Court by moving a petition u/s 20 of the Act. I agree with this submission of the petitioner''s learned counsel. Section 20(1) of the Act states that where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter Ii, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court. Sub sections (2) to (4) then incorporate the provisions relating to the agreement being filed in the Court for the appointment of an arbitrator in accordance with the agreement between the parties. Section 20(1) says that either party to the agreement may move a petition to the Court for the agreement being filed in the Court for the matters in dispute being referred to arbitration instead of that party proceeding under Chapter Ii i.e. seeking reference out of Court. It thus appears that u/s 20(1) parties to the agreement have been given a right to get the matters in dispute referred to arbitration through the agency of the Court instead of seeking reference to arbitration out of Court. Thus there does not appear to be any warrant in the proposition that a party must first exhaust its remedy of seeking reference to arbitration out of Court and that it is only on its failure to get the matters referred to arbitration out of Court that that party can approach for reference through the Court In the case of Greenland Foods Pvt. Ltd. Vs. Union of India, , R.N. Aggarwal, J. held that where the arbitration clause provided that the dispute shall be referred to the arbitrator to be appointed by the Secretary, Food Ministry, and the party made an application u/s 20 of the Act, the application can be considered as an application to the Secretary for appointment of the arbitrator.
(6) Mr. Amarjit Singh, learned counsel for the respondent submitted that a reading of sub-section (4) of section 20 would show that an order of reference can be made by the Court if the parties to the agreement cannot agree upon an arbitrator and that unless either party to the agreement has approached the persona designata for appointment of an arbitrator in accordance with the agreement it cannot be said that the parties have not agreed upon an arbitrator and Therefore, resort to section 20 of the Act cannot be sought seeking appointment of an arbitrator through the agency of the Court. I do not find any merit in this submission. No doubt in a case in which there is a persona designata who has to appoint an arbitrator in accordance with the arbitration agreement between the parties and the appointment of an arbitrator by the Court itself is sought, then unless the Court comes to the conclusion that the persona designata has refused or neglected to appoint an arbitrator, the Court itself cannot nominate an arbitrator. However, that is not the question for consideration. The only question for consideration is as to whether the present application can be treated as an application by the petitioner for directing the persona designata to appoint an arbitrator in accordance with the agreement as entered into between the parties or not. I am of the view that the present application can be treated as including that prayer in the first instance. Mr. Amarjit Singh referred to a decision of the Full Bench of this Court in the case Ved Prakash Mittal Vs. Union of India and Others, . The question for consideration before the Full Bench was that whether in a case in which the person designated to appoint an arbitrator failed or refused to appoint an arbitrator, the matter in dispute cannot be referred to arbitration at all or the Court has the power u/s 20 of the Act to appoint an arbitrator itself. It was held that section 20(4) confers upon the Court a general residual power to appoint an arbitrator when the parties do not agree upon the arbitrator. The purpose of the section is to effectuate the intention of the parties in certain events in which one would expect them to intend that the provision for arbitration should stand, but which are not covered in terms by the arbitration provision. If the arbitrator is not appointed by the agreed appointer such a case is contemplated by the authors of section 20(4). The Full Bench also observed that the intention of section 20(4) is to confer power on the Court to make an appointment where the machinery of appointment has broken down and that on the failure of the persona designata to appoint an arbitrator, the Court is fully competent to appoint an arbitrator u/s 20(4) of the Act. This judgment has thus no bearing on the question for consideration in the present case namely, as to whether either party to arbitration agreement can seek reference of matters in dispute to arbitration u/s 20 of the Act through the Court instead of referring the disputes to the arbitrator out of Court under the provisions of Chapter Ii of the Act. Mr. Amarjit Singh also referred to a decision of the Calcutta High Court in the case of Union of India (UOI) Vs. Himco (India) Ltd., . In that case according to the arbitration agreement the disputes were referable to the arbitration of the Director General Supplies and Disposals or a person to be appointed by him. It was observed by the Court that this clause indicated that the parties intended that the Director General Supplies & Disposals used not act as arbitrator and the person nominated by him may only do that job; and that thus till the Director General Supplies & Disposals had expressed his willingness to act as an arbitrator, or had appointed somebody else to act as an arbitrator, it could not be said that there was agreed arbitrator to whom order of reference could bs made. It was observed that in an application u/s 20 it was for the petitioner to indicate in the petition that the Director General Supplies & Disposals had either agreed to act as an arbitrator himself or had nominated the arbitrator in terms of the agreement so that the reference could be made to either of them. However, as that was not done by the petitioner and nor could be done as the Director General Supplies & Disposals had neither expressed his willingness to act himself nor nominated another person to act as an arbitrator, the order of reference to the Director General of Supplies & Disposals on an application u/s 20 was Therefore, held as not